NEW DELHI: The Federation of Indian Chambers of Commerce and Industry (FICCI) has recommended that the government waives off interests, penalties, delayed charges and accruals to airport operators, in order to rescue the country’s crisis-hit aviation sector. Among other measures recommended by the chamber for the sector are easing of Goods and Services Tax (GST) and other tax structures, declaration of aviation as a “Core Infrastructure Industry” and bringing aviation fuel under the GST regime.
FICCI said India’s aviation industry is facing a crisis of unimaginable proportions due to the impact of the coronavirus pandemic. With prolonged travel restrictions in place around the world, one of the major challenges faced by the industry is a massive plunge in cash reserves as fleets remain grounded for almost a month now. Many airline companies are on the brink of bankruptcy, putting at risk around 30 lakh jobs. “It is likely that banks may be reluctant to extend credit to airlines in the current situation in the absence of guarantees.
The corporate bond market is a vital source of cash, but the eligibility of corporate bond support needs to be extended by the Reserve Bank and guaranteed by the government to provide credit access for a wider range of companies,” FICCI said in its recommended list.
“Airline cancellations far outstrip any fresh ticketing; airlines thus have negative sales during Covid-19. This results in airline GST refunds being higher than the GST due. It is recommended that the Government of India consider deferment of payment of GST for the airline industry,” FICCI said. It added that Aviation Turbine Fuel (ATF) may be brought under the ambit of GST, since for any airline in India, the ATF cost constitutes about 40 per cent of the total operational cost.
Presently, ATF attracts excise duty at 11 per cent and VAT (which varies from state to state) up to 30 per cent. FICCI also recommended that government levy uniform GST of 12 per cent on aviation services covering airports, cargo services and general handling, and zero custom duty and a uniform 5 per cent GST on all types of aircraft imports, including private category. Further, it recommended financial aid in terms of reduction in airport charges, overflight fees, taxation on passengers over security, and temporary reduction of excise duty on ATF. “Parking and landing fees should be waived off along with royalties to the airports for using the infrastructure,” it said.
Aviation blues India’s aviation industry is facing a crisis of unimaginable proportions due to the pandemic. With prolonged travel restrictions in place, one of the major challenges faced by the industry is a massive plunge in cash reserves